History and Nature of IFTA New IFTA Attorney training Clark Snelson Utah Assistant AG ( with thanks to Ted Spangler, former Idaho Assistant A.G. retired)

Why IFTA? Carriers wheeled 8 foot high stack of state fuel tax filings into congress and said “we need help” Inconsistent filing periods, definitions, record keeping requirements, rules and laws made compliance difficult If something did not change, congress threatened action

State cooperative model RIFTA

1983 Birth of IFTA Arizona, Iowa and Washington form the “International Fuels Tax Agreement.” Go big or go home…. Took RIFTA cooperative concept with view to a broader application.

1984 Federal legislation authorizes working group on motor carrier fuel taxes IFTA, RIFTA looked at as way to address carriers concerns, while maintaining state control

New model IFTA agreement adopted by member states Original three members grows to six: Arizona, Idaho, Iowa, Minnesota, Oklahoma & Washington. Six grows to 16. IFTA gains momentum!

1991 Congress acts-- ISTEA Intermodal Surface Transportation Efficiency Act (ISTEA) enacted by Congress (49 USC – 31707) Funds working group to assist implementation September 30, 1996 deadline for US states.

49 U.S.C (a) Reporting requirements.--After September 30, 1996, a State may establish, maintain, or enforce a law or regulation that has a fuel use tax reporting requirement (including any tax reporting form) only if the requirement conforms with the International Fuel Tax Agreement.

49 U.S.C (b) Payment.--After September 30, 1996, a State may establish, maintain, or enforce a law or regulation that provides for the payment of a fuel use tax only if the law or regulation conforms with the International Fuel Tax Agreement as it applies to collection of a fuel use tax by a single base State and proportional sharing of fuel use taxes charged among the States where a commercial motor vehicle is operated.

Exceptions Alaska & Hawaii No real Interstate trucking concerns RFTA states: Maine New Hampshire Vermont

1991 IFTA goes corporate IFTA, Inc. formed as Arizona nonprofit corporation Administrative body for IFTA 9 member governing board Contracted with Lockheed IMS for staffing and support.

IFTA Staff Executive Director Program Director Information Systems Administrator Webmaster Events Coordinator Executive Assistant Program Compliance Administrator (part time)

1992 IFTA, Inc. hires Executive Director IFTA goes international, Alberta first Canadian member 22 Jurisdictions particapating Base state working group formed to assist implementation

Base state working group Members from: NGA, AAMVA, NCSL, FTA, IFTA, Inc. Bd. & RFTA Provide technical assistance to IFTA and IRP Recommend procedures Figure out “what have we done, and how are we going to make this work”

1994 IFTA, Inc assumes duties from Lockheed - Opens office Adopted peer review - now “Program Compliance Reviews” 38 Jurisdictions

1996 ALL ABOARD!! ISTEA mandate take effect. States must conform to IFTA to require fuel tax reporting and impose fuel use tax. 48 U.S. States (Alaska and Hawaii exempt) 10 Canadian Provinces Current membership

NCSL Project States wonder “What did we just do?” State Legislation and Constitutional Provisions Project contracted with NCSL to assist states in implementing IFTA NCSL works with IFTA representatives to study IFTA 1999 NCSL issues report to state legislatures

What is IFTA & Why Should I Care? What is is determines how you defend it Need to know the consequences of taking a position will effect more that the results in your case We need to be consistent in representing to the courts what IFTA is What IFTA is governs how it can grow and change Effects enforcement and collection

IFTA has many characteristics Interstate compact with congressional approval Voluntary agreement between truckers and states Aspects of a mutual agency relationship State statutory authority State regulatory authority Reciprocal State laws

IFTA is a hybrid agreement Conclusions of NCSL report: 1. Core concepts are an interstate compact under the Compact Clause of the the US Constitution 2. Implemented by reciprocal statutes. 3. Administered through reciprocal administrative agreements

Core Concepts (Reflected in ISTEA) ISTEA mandates state conformity with core concepts: Single Base jurisdiction concept for: reporting payment auditing Uniform definition of taxpayer Jurisdiction retention of substantive tax authority (e.g., rates, exemptions)

Compact Clause Implications Compact provisions are federal law Can preempt operation of inconsistent state law Cuyler v. Adams 449 U.S. 433 (1980)

Implemented by reciprocal statutes Reflect that IFTA is an agreement to which each jurisdiction is a party Proper delegations of authority to administrators (not core provisions or legislative power) Clear assessment & collection authority Beware of incorporation by reference problems

Administered through reciprocal administrative agreement. Provides flexibility for the details of administration, collection and enforcement States can adopt administrative rules consistent with the agreement Underutilized in most jurisdictions

IFTA is not a federal mandate Began without federal action States allowed to amend IFTA Few federal components

New York v. US, 505 US 144 (1992) “No matter how powerful the federal interest involved, the Constitution simply does not give Congress the authority to require the States to regulate. The Constitution instead gives Congress the authority to regulate matters directly and to pre-empt contrary state regulation. Where a federal interest is sufficiently strong to cause Congress to legislate, it must do so directly; it may not conscript state governments as its agents.”

Printz v US 521 U.S. 898 (1996) "[E]ven where Congress has the authority under the Constitution to pass laws requiring or prohibiting certain acts, it lacks the power directly to compel the States to require or prohibit those acts…. "

Where is IFTA? 1.Articles of Agreement 2. Procedures manual 3. Audit manual

R120 GOVERNING DOCUMENTS The Audit Manual and Procedures Manual authorized by this Agreement are equally expressive of, and constitute evidence of this multijurisdictional agreement. The provisions of all three IFTA documents shall be equally binding upon the member jurisdictions and IFTA licensees.

What It All Means IFTA is: Widely accepted Effective Adaptable AND Largely untested in court

Questions?